What The Health Law Will Bring In 2013

The majority of what happens on Jan. 1, 2013, is tax increases and cuts in tax deductions to pay for the changes coming in 2014.

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Most of the really big changes made by the 2010 health law don't start for another year. That includes things like a ban on restricting pre-existing conditions, and required insurance coverage for most Americans. But Jan. 1, 2013, will nevertheless mark some major changes.

One of those changes that will affect everyone with private health insurance actually took effect last September. But most people won't see it until they renew or apply for new health insurance. It's called a summary of benefits and coverage. The idea is to help people actually understand what's in their insurance policies.

"One of the big complaints of people in polls or focus groups is that they just ... don't understand either the coverage or the price," said Jay Angoff, a former official at the U.S. Department of Health and Human Services who worked on implementing the health law.

But with the new document, he says, "there's a standard format that allows people to compare benefits to make apples-to-apples comparisons, not just on price but on benefits."

Health plans will also have to provide consumers a glossary of insurance terms if they ask for it.

"It's still harder than some people would want," Angoff says. "It's still a complicated area. But I think HHS has really done a very good job in making it as simple and as meaningful as possible."

Later in 2013 will also bring a key launch date for the law, says Angoff: "Oct. 1, 2013, is when open enrollment begins."

That's when people can start signing up for their 2014 coverage through the new health exchanges, or marketplaces, that the states and federal government are creating. Angoff, who used to head the office that's in charge of building those exchanges, says he's confident that things will happen on time.

"HHS has met all statutory deadlines on this until this point, and I have confidence that HHS will continue to meet those deadlines," he said.

But the majority of what happens on Jan. 1 is to pay for the changes in 2014 — in other words, tax increases and cuts in tax deductions. For example, starting next year, people will only be able to put $2,500 pretax into flexible spending accounts that they use to pay for items insurance doesn't cover.

"For example, if they buy eyeglasses, if they pay copays on drug benefits or to their physician, they can submit those claims and be reimbursed from the pretax dollars," said Marilyn Moon of the American Institutes for Research.

Moon says that while the change may hurt some people with very high out-of-pocket spending not covered by insurance, lawmakers decided this was a fair way to raise some of the money needed to pay for the rest of the law.

"This is a benefit that largely accrues to higher-income individuals who can afford to set aside a certain amount of money every year to pay toward their health care spending," she said.

There's another tax change coming next year for the wealthy. Individuals earning more than $200,000 a year and couples earning more than $250,000 will see a nearly 1 percentage point increase in their Medicare payroll tax. They'll also have to pay a 3.8 percent Medicare tax on their nonwage income. Moon says that represents a big change.

"The payroll tax usually applies only to wages, and now this law will extend it to investment income as well," she said.

Those who take deductions for medical expenses on their income taxes will also see a change starting in 2013. Right now, expenses in excess of 7.5 percent of adjusted gross income are deductible. That's going up to 10 percent for all except the elderly.

It will affect some people who spend a lot on medical care, says Moon. But the new law should also reduce the number of people with those very large bills, "because if everyone has health insurance, many fewer people should have to pay large amounts out of pocket on health care. Ten percent will not affect very many people in the future, one would hope, when they get better insurance coverage."

Finally, there's a key change made by the health law for 2013 that will affect only the poor. Starting Jan. 1, state Medicaid programs will be required to reimburse doctors who provide primary care at Medicare rates, which are substantially higher. The idea is to get more doctors into the Medicaid program, which will itself expand in 2014.